Kitchen fires present serious challenges for insurers and their claims professionals, actuaries, SIU personnel, forensic accountants, and property and liability teams. Per the U.S. Fire Administration and National Fire Protection Association (NFPA), every year, cooking equipment fires in one- or two-family homes and apartments or other multifamily housing account for about 46 percent of all reported fires, 5,190 injuries, 480 fatalities, and more than $1.1 billion in property damage. Not surprisingly, the NFPA says that the majority of those fires, roughly 94 percent (or more than $970 million in damages), originate in the kitchen. It also says that ranges or cooktop appliances, with or without integrated ovens, are implicated in more than 73 percent (or $828 million in damages) of those fire losses. “Unattended cooking” is the leading factor in roughly 33 percent ($363 million in damages) of home cooking fires. The numbers include fires where cooking equipment is involved in the ignition sequence or where the fire did not progress beyond the device itself. The average range or cooktop fire results in $8,000 in property damage.
With this kind of money and damage at issue, we must analyze the steps taken to investigate the legitimacy of cooking equipment fires or, alternatively, to eliminate the possibility that these fires are incendiary. For claims professionals, it can be a relatively easy decision to complete the origin and cause investigation of cooking-related fires that result in injury and/or death. But, in the higher frequency, low property damage kitchen fire claims, sound investigative principles sometimes fall by the wayside when a business decision is made to simply pay the claim. Small monetary thresholds, high caseload volume, and internal pressures to close claims files increase the likelihood that the actual origin or cause will be missed.
There is no dispute that claim decisions should be based on reliable, relevant, and complete data. The scientific method is the cornerstone to achieving that level of reliability. For years, we’ve been taught to apply this problem-solving framework to our fire and explosion origin and cause investigations because it allows us to advance our investigation, acquire new information, prevent mistakes, and avoid confusion. Unfortunately, the logistics involved with sound investigative principles do not always comport with the high-volume, low-dollar kitchen fire claims that may overwhelm insurers on a daily basis. In the rush to close the file, insurance claims professionals may very well diary incomplete data or unsupported opinions. For insurers, the impact of inherently unreliable claims file decisions can impact their effectiveness for all fire claims, kitchen or otherwise.
The statistics alone suggest that it is beneficial to determine what really happened with these types of fire claims. But there are times when an insurer’s decision to pay its insured has nothing to do with the ability to identify the origin or cause of the fire. Even if the fire’s origin is precisely defined to the kitchen, it can become next to impossible to distinguish between an occupant who became distracted during a cooking operation and accidentally started a fire from an occupant who intentionally placed cooking oil in a pan on an energized burner and intentionally allowed the fire to develop. The uncertainty of human intent makes the dividing line between “accidental” and “incendiary” fires difficult to distinguish and, short of a confession, perhaps even impossible. Because it’s a difficult case to make, insurers sometimes pay the claim and move on, realizing that additional time and expense puts them no closer to being able to eliminate an intentional act. The point is, an insurance claims professional can spend money and resources on an investigation and still be unable to know if there is fraud involved.
If the claims professional moves forward with a forensic investigation of a kitchen fire claim, the investigation has to be grounded in reliability. In other words, even though it’s difficult to eliminate the possibility of an incendiary fire, what level of reliability are you operating under to deny or pay the claim? If an investigation is pursued, it is paramount that the insurer has properly vetted, qualified, and certified competent subject matter experts for the specific causation issues at play. Those issues are as varied as the specific types of properties damaged. Kitchen fire claims do not always follow logical paths, and they can have many causes. Often, the incident itself will destroy or significantly diminish crucial evidence. For example, in assessing ignition source competency, some investigators may ignore forensic indicators or simply overlook the role of an electric range or cooktop (rangetop) based on witness statements alone. Further, an improperly vetted and selected expert can have devastating effects on the claims outcome and can invite unfounded demands and litigation from other parties attempting to shift the risk of their own insured’s loss.
Once the certified, qualified, and competent expert is selected, the claims professional must make use of the data from the expert. To effectuate that, the expert must be able to relay the information in a way that makes sense and can be readily applied to the overall decision-making process. Moreover, the claims professional needs to understand the information and issues at hand. As a result, fire investigation-related training for the claims professional can have a significant impact on the process, too. A qualified expert working with a well-trained claims professional can increase the level of reliability.
Modern-day fire incident statistics show that kitchen area, cooking-related appliances cause or contribute to more property damage each year than anywhere else within the home. Individual kitchen fire claims present small risks for claims professionals, and it can be difficult to eliminate the possibility of fraud. Nonetheless, the aggregated impact of kitchen fires should motivate insurers to, at the very least, question the reliability of their claims decisions and seek to assemble qualified and competent experts and claims professionals to make their claims decisions.